A North Carolina federal judge upheld a lawsuit brought by the U.S. Department of Justice against Carolinas HealthCare System alleging the system's steering provisions in insurer contracts are anticompetitive.
U.S. District Court Judge Robert Conrad ruled Thursday that the DOJ has sufficient evidence to prove the 10-hospital system takes advantage of its market power in Charlotte, N.C., by forcing four major insurers into steering contracts that raise prices for patients.
Carolinas controls 50% of the healthcare market in the Charlotte area. The DOJ claims that insurers agree to contracts with Carolinas that prevent them from steering patients to less costly providers because of this market power.
The health system alleges it needs steering provisions in order to prevent insurers from using its inclusion in their plans as a marketing ploy. Carolinas' attorneys also claim that their arrangements with the insurers promote competition because the health system is providing discounted services in exchange for “customer loyalty.”
The insurers—Aetna Health of the Carolinas, Blue Cross and Blue Shield of North Carolina, Cigna Healthcare of North Carolina and UnitedHealthcare of North Carolina—hold 85% of the commercial insurance market in the Charlotte area, according to the feds.
Judge Conrad dismissed efforts by Carolinas' attorneys to toss out the suit because it's similar to another case involving American Express that the federal government lost. Conrad ruled that the cases aren't comparable because one involves the credit card industry while the other relates to healthcare.
In response to the judge's ruling, Carolinas said in a statement that it “has not violated the antitrust laws and we look forward to further supporting our position in court.”
The case is one of the first from the Justice Department targeting anti-steering provisions in hospital contracts.
